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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/24/2017 - NATURAL AREAS BUDGET OVERVIEWDATE: STAFF: January 24, 2017 John Stokes, Natural Resources Director Mark Sears, Natural Areas Program Manager WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Natural Areas Budget Overview. EXECUTIVE SUMMARY The purpose of this item is to review the City’s Natural Areas Department budget and its spending on key priorities, in particular the split between land conservation and operations and maintenance. Topics that will be covered include: (1) long-term budget projections, including a description of how the Department manages the spending requirements of the ballot initiatives; (2) fund allocations to programs, including land conservation, ecological restoration, and operations and maintenance, and; (3) internal administrative charges and certain capital expenses. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does Council have any general questions, comments, or concerns about the Natural Areas budget information? 2. Does Council have any questions, comments, or concerns related to the relative allocation of Natural Area funds to various programs, in particular land conservation versus operations and maintenance? BACKGROUND / DISCUSSION The Natural Areas Department receives the vast majority of its funding from the County’s Help Preserve Open Space Tax and the City’s Open Space Yes Sales Tax. See “2016 Budgeted Revenue” chart below: January 24, 2017 Page 2 The Natural Areas Department maintains a detailed long-term budget plan that projects revenues and expenses through 2030. Spending priorities and budgets for the Department are based on the City’s strategic objectives as well as the Council-adopted Natural Area Master Plan (2014); and, the spending requirements of Open Space, Yes and Help Preserve Open Space. Key Strategic Objectives include: 2.1 Improve the community’s sense of place with a high value on natural areas, culture, recreation, and park systems. 2.3 Promote health and wellness in the community and provide sustainable access to nature. 4.8 Expand, improve, restore, and protect wildlife habitat, urban forests, and the ecosystems of the Poudre River and other urban ecosystems. The Master Plan provides a broad roadmap to core natural area activities. They include:  Land Conservation  Ecological Restoration  Recreation - Public improvements (trails, parking lots, etc.)  Education, Outreach, Volunteer Engagement  Law enforcement and visitor outreach  Land and Water management (asset management)  Facilities management The Department also houses Nature in the City, which was adopted by Council in 2015 (after the 2014 Natural Areas Master Plan). The Open Space Yes (OSY) ballot language requires that 80% of revenues be spent for land and water conservation and restoration activities. The remaining 20% (or less) may be spent on capital improvements or operations. Help Preserve Open Space (HPOS) is more flexible and may be spent on conservation or capital and operations activities. To help track spending categories, staff characterizes funds as “green” or “blue”. Green funds are allocated to land conservation and restoration activities. Blue funds may be spent on any work of the Department but serve as the foundation for operation and capital activities. To meet the spending requirements of OSY, staff manages towards the 2030 end date of the OSY ballot. To date, green spending has exceeded the 80% OSY requirement by approximately $10.5 million. The exceedance has been achieved by using blue dollars for land acquisition. Staff’s approach is a soft landing in 2030 whereby the 80% requirement will be exceeded by a comfortable margin. Core Physical Assets The Department manages approximately 36,000 fee-owned acres and approximately 6,000 acres of conservation easements. The Department manages a small but significant water rights portfolio, as well as a number of properties with open water. There are 49 separate natural areas; 41 are open to the public (several more will be open by the end of 2017 or early 2018). There are 117 total miles of trail; 44 miles of those trails are within the GMA. The department manages 12 buildings and various other facilities. January 24, 2017 Page 3 Long-Term Projected Revenues and Expenditures The following graph provides projected spending information from 2017 to 2030. The long-term budget projections are based on strategic objectives, Council priorities as set through Budgeting For Outcomes and the Master Plan, expected future obligations associated with management, operations, and capital expenses; and, meeting the spending requirements of OSY. Please note that “Land Conservation Ops” includes all expenses related to the acquisition of real property such as appraisals, staffing, legal assistance, and surveys. The following table provides a percentage-based comparison of spending for the period of 2006 to 2016 to projected spending from the period 2017 to 2030. 2006 to 2016 2017 to 2030 Restoration 12% 12% Land Conservation 28% 31% Debt Service for Land 11% 2% Land Conservation Ops 4% 6% Personnel 18% 29% Operations and Maintenance 11% 13% Capital projects 16% 7% There are three areas with significant differences for the two periods:  Total land conservation spending is projected to drop by 4% thru 2030.  Personnel are projected to increase by 11%.  Capital projects are project to fall by 9%. The first two changes are attributable to the fact that the land inventory of the Department has tripled in the last ten years or so. Moreover, the City continues to acquire additional conservation land. Thus, core management costs will increase through 2030 and overall spending will shift slightly to accommodate the increased management costs. January 24, 2017 Page 4 While capital costs are projected to fall, it is possible they will be greater than the projection. Currently they are projected at a baseline level, but as noted below, a large project or infrastructure needs could drive this percentage higher. All revenue and expense projections are based on a 2% inflation factor. Green revenue and expense projections do not include potential fundraising, grants, or other leveraging possibilities. It is possible that green revenues and expenditures will be greater than current projections. The last several years have seen actual revenues exceed projections via tax or grant revenue. Almost all of that excess revenue has been dedicated to land conservation. A potential challenge is meeting the 80% OSY requirement while also meeting capital and operational needs. Staff projects that the $10.5 million positive “green” balance will start to be drawn down beginning in the next budget cycle at a modest level. That draw down will accelerate in the mid-2020s. Staff’s currently projects that the 80% requirement will be exceeded by about $5 million by 2030. This projection is likely to change as 2030 gets closer and as revenues, spending, and Council priorities evolve. In addition, capital and operations expenses are projected at baseline levels; thus, the exceedance could be drawn down. For example, this could occur if Natural Areas bought a large property that required extensive capital investments. Internal Charges and Capital Expenditures Council’s Leadership Planning Team asked staff to provide information regarding charges made to the Natural Areas Department to support various internal services as well as how the Department funds its operating infrastructure (such as office buildings). The City’s Finance Department applies a formula to charge non-general fund sources of revenue for various services, such as Human Resources, Finance, etc. The charges represent the budgeted expenses of a given fund (such as the Natural Areas fund) expressed as a percentage of total funding for the various services. For Natural Areas, this amounts to $226,000 annually. Natural Areas also contributes $48,000 for Safety, Security, and Risk Management, and $120,000 for Information Technology support. The charges amount to $394,000 annually. (Natural Areas also pays $21,000 for insurance – but this is a charge administered to all funds and departments.) In addition, Natural Areas pays for .5 FTE of a City Attorney’s time as well as for 1.5 FTE in Real Estate Services that work on behalf of Natural Area. In addition to administrative charges, Natural Areas pays for its entire infrastructure such as office buildings. In 2017, Natural Areas will receive both KFCG and general fund dollars. Excluding West Nile Virus, the funds amount to $184,000. The monies primarily are used for Nature in the City (NIC) staffing and some Poudre River efforts. NIC also will receive approximately $190,000 for capital projects from the Community Capital Improvement Program (CCIP). ATTACHMENTS 1. Powerpoint presentation (PDF) 1 Overview of the Natural Areas Department Budget John Stokes, Mark Sears, Barb Brock City Council January 24 2017 ATTACHMENT 1 1. To provide a general overview 2. To address any questions or concerns 3. To explore the split between the different programs, in particular land conservation and other activities 2 General Direction and Questions 1) Does Council have any general questions, comments, or concerns about the Natural Areas budget information? 2) Does Council have any questions, comments, or concerns related to the relative allocation of Natural Area funds to various programs, in particular land conservation versus operations and maintenance? 3 Revenues 4 Blue Green Split • 80% of OSY revenues must be spent on land and restoration • All other funds can be spent on all natural area purposes; typically spent on operations, maintenance, personnel, capital • Currently have a $10.5 surplus in green spending • Will begin to spend that down as we approach 2030 expiration of OSY 5 Long-Term Projections 6 Trends Comparison 2006 to 2016 2017 to 2030 Restoration 12% 12% Land Conservation 28% 31% Debt Service for Land 11% 2% Land Conservation Ops 4% 6% Personnel 18% 29% Operations and Maintenance 11% 13% Capital projects 16% 7% 7 • Land Conservation spending is projected to drop 4% thru 2030 • Personnel are projected to increase by 11% • Capital projects are projected to drop by 9% 8 • Current focus is on smaller, local properties • Thus, acreages could be lower than this projection • Might be able to increase acreage if focus shifted to larger regional properties 9 • Land cost inflation 4% • Revenue growth 2% • Avg. cost of land $5,000 (fee and conservation easement • Population growth 2% Internal Charges and Capital Expenditures • Total internal charges $394,000 annually • Human Resources, IT, Finance • Safety, Security, and Risk Management • .5 City Attorney • 1.5 FTE in Real Estate Services • All infrastructure/facilities 10 General Direction and Questions 1) Does Council have any general questions, comments, or concerns about the Natural Areas budget information? 2) Does Council have any questions, comments, or concerns related to the relative allocation of Natural Area funds to various programs, in particular land conservation versus operations and maintenance? 11